Strategic land use policy

Industrial land in context

The Victorian economy produces around $467 billion worth of economic activity annually. This is the result of the productive activity of 3.4 million working in over half a million businesses and the consumption of over two and a half million households. This activity takes place in offices, factories, shops, warehouses and homes. Victoria’s competitive advantage in attracting economic investment and employment relies, in part, on the availability of sufficient industrial land supply across metropolitan Melbourne to meet future demand.

The economy has transformed over the past two decades by influences such as globalisation, reduced trade barriers and technological change. While Melbourne still maintains a significant manufacturing sector, its contribution as a share of the Victorian economy has declined. There has been strong growth in knowledge and service-based industries, construction and freight and logistics to serve population growth.

Industrial land continues to be an important component in the evolving economy with uses such as:

  • warehousing space for freight, logistics and retail businesses
  • large and affordable spaces for creative industries
  • business services firms such as testing laboratories, labour or equipment hire businesses.

Sufficient land is necessary to support Victoria’s competitive advantage in attracting economic investment. This will help meet future demand for a range of existing and emerging business and employment purposes. Potential impact of the coronavirus (COVID-19) pandemic on industrial land The data for 2020 covers the first 9 months of the coronavirus (COVID-19) pandemic. Industrial land consumption across metropolitan Melbourne has decreased slightly to 307 ha compared to 324 ha in 2019.

While it is too early to identify the impacts of the coronavirus (COVID-19) pandemic on industrial land use, there are some early insights that may lead to further consumption of industrial land for warehousing, manufacturing or other uses:

  • increased online sales
  • shortening supply chains through greater storage capacity or local manufacturing
  • higher levels of automation in storage and logistics land uses
  • greater demand for cloud-based services which leads to buildings that need to accommodate digital storage with some of these located on industrial land.
The Melbourne Industrial and Commercial Land Use Plan

The Melbourne Industrial and Commercial Land Use Plan reinforces the impotence of industrial land supply.

The Melbourne Industrial and Commercial Land Use Plan (MICLUP) builds on policies, strategies and actions in Plan Melbourne and its associated Plan Melbourne 2017-2050 Five-Year Implementation Plan (Plan Melbourne Implementation Plan). It provides an overview of current and future needs for industrial and commercial land across metropolitan Melbourne and puts in place a planning framework to support state and local government to plan more effectively for future employment and industry needs.

To support industrial land use planning, a classification system has been put in place to assist how specific types of areas are planned. Zoned and Proposed Future Industrial Land across metropolitan Melbourne has been categorised as being a state, regional or local significance precinct. These precincts identify which land that should be retained primarily for industrial, considered for other business or employment focussed purposes, and land that could be considered for alternative uses.

Population growth prospects

Population growth is a key factor in the establishment of new industrial uses and the expansion of existing operations. Before the coronavirus (COVID-19) pandemic, Victoria was the fastest growing state in Australia, reflecting its attractiveness as a place to live, work and study. However, the coronavirus (COVID-19) pandemic has had a negative impact on population growth.

As outlined in the Victorian Budget 2020/21 (Budget Paper 2 – Strategy and Outlook), “Victoria’s population is forecast to be unchanged in 2020-21, before growing by 0.3 per cent over 2021-22. As national borders reopen, and confidence in the economic outlook improves, population growth is expected to slowly pick up, to reach around 1.7 per cent by 2023-24. Nevertheless, this remains below the average annual growth rate of 2.3 per cent over the five years before COVID-19.”

Victoria in Future (VIF); is the official state government projection of population and households. Projections are based on trends and assumptions for births, life expectancy, migration, and living arrangements across Victoria.

Page last updated: 13/10/21